LAHORE: As expected, the Punjab government has increased its wheat procurement target by another million tonnes – from 3.5 to 4.5m tonnes – and hopes to take its total stock close to 5m tonnes, including 450,000 carryover, if not beyond it.

Given the crisis in Black Sea region and difficulty in import from Russia and Ukraine, which take care of over 80 per cent imports during the stress season, Punjab had been feeling insecurity with regular stocks.

The first major decision by Chief Minister Hamza Shehbaz after taking over on April 30 was to raise the target by one million tonnes. The Punjab Food Department, on its part, never terminated buying spree even after completing 3.5m tonnes and had since been purchasing: slowly but stayed in the market even during the Eid holidays and has already hit 4m tonnes by Thursday. It has now close to 4.5m tonnes in its coffer if carryover stock is included in the tally.

“Effectively, the department now has to procure another 500,000 tonnes to meet its new target,” explains a high-ranking official. However, it would not get out of market as long as keep getting the commodity, even if means purchasing 300,000 to 400,000 tonnes more.

Ukraine crisis prompts govt to be particular about food security

The millers, according to their own record, had so far purchased close to 860,000 tonnes. If they continue purchasing, as they have been allowed through permits, and get close to 1.5m tonnes, the province could end up somewhere close to 6.5m tonnes and it should be comfortable by any stretch of imagination.

The department thinks that imports from the Black Sea region would not be possible this year for two reasons: price and sanctions. International prices have already gone beyond Rs4,000 per maund in local denomination. Even if price factor is taken care of after some miracle, sanctions alone would make buying impossible. The Russians may physically hinder imports from Ukraine. Thus, buying maximum wheat from local market is only option left with Punjab and Pakistan, he explains.

The millers, on their part, are beholden to their own financial calculations – buying, but with visible reluctance.

Majid Abdullah – a miller from the city explains the reluctance: “The millers always knew with Shehbaz Sharif as prime minister, wheat and flour would become a policy pivot. He has history of releasing wheat at less than procurement price to facilitate the poor on staple. This is precisely the point causing discomfiture among the millers. To them, the million-dollar question is how would he behave this time? Miller would be investing roughly Rs105 per maund on the financial head only in next four months at a rate of Rs27 per maund per month. This is minus storage cost. Thus, if millers, somehow are able to purchase at Rs2,350 per maund now, they would end up at Rs2,450 per maunds in July or August, when they traditionally go to the department. What if the prime minister and the chief minister decide to release wheat at a rate less than that? This question is holding the millers back, and would continue haunting them. Now with increased target, the millers would know healthy position of the department and avoid purchase knowing that they would get wheat anyway.”

Published in Dawn, May 6th, 2022